Environmental Services Update- May 2018
Edge Insights’ experts are constantly monitoring the Environmental Services industry in order to help ensure the best possible pricing and contract terms for our clients. The following report lists some of the recent news in the Environmental Services industry.
In case you did not see it, Edge’s February 2018 Environmental Services Update had an interesting article called ‘Wishful Recycling’ related to single stream recycling. It described how well-intentioned people are placing items that they think ‘could’ or ‘should’ be able to be recycled into their single stream recycling containers. Click here to view it.
The following paragraphs describe how the recycling industry is being affected by contamination in all categories of recyclable scrap material.
China’s New Recycling Restrictions
Starting in July 2017, China placed a ban on 24 select categories of scrap. Early this year, China banned additional items and placed tough restrictions on the recyclable items that it continues to accept. On 5/4, China announced that is has halted all US scrap imports for one month in a surprise move.
These moves by China are causing havoc in the industry. Recyclers are scrambling to find other outlets for the material and are being forced to stockpile some materials. In addition, the rebates that are paid for the recyclables have plummeted.
Recovered paper prices are published monthly by Pulp & Paper Week for the different regions of the US. Here are a couple examples of how much recycling rebates have dropped from March of 2017 to May 2018 for the New York region (also reflective across the country).
Baled cardboard: $180 to $70 (referred to as OCC meaning old corrugated containers)
Mixed paper: $95 to $0 (newspaper, magazines, office paper, pamphlets, etc.)
* Rates shown are NY High prices per ton
China’s policy is called National Sword and it was put in place to limit the import of contaminated recyclable materials and to increase inspections of the material. According to the Huffington Post, China processed at least half of the world’s exports of waste plastic, paper and metals in 2016. But last year, China decided that it no longer wanted to be the world’s recycling bin primarily because of the amount of trash that was being included with the recycling.
Haulers and Recyclers are Feeling the Impact
A year ago, recyclers were making large profits by handling, sorting and selling recyclables. Some recyclable items were big winners, some small winners, and some break even. But overall, it was a good situation.
Now, recyclers are showing even smaller profits and some of the costs are being passed onto haulers.
Export recyclers are really feeling the pain. What used to cost them $800 to ship material to China on a back haul is now costing upwards of $1,300 to ship to India or elsewhere.
Many recyclers will no longer take a chance to ship material to China even if they have improved their process in fear of rejection and having to pay possible fines and charges to return the material.
Recyclers are trying to clean up their act but it comes at a price. They are adding manpower and/or additional automatic sorting mechanisms to their sorting lines in order to reduce their contamination rate. These changes are good but long overdue. The industry was actually its worst enemy because it was seeking high profit margins on a poor product.
When haulers take single stream recyclable materials to a recycling center for processing, they pay a tipping fee. The tipping fee is a charge to dump the material at the recycling center. Because of the effects of China’s new restrictions and the associated extra processing costs, tipping fees are on the increase and haulers are more frequently charged additional charges for excessively contaminated loads.
Haulers Respond with New Fees and Rate Increases
In response primarily to the impact of China’s new restrictions, US haulers are coming up with creating ways to cover the increased costs related to recycling.
In late February 2018, Advanced Disposal started adding a new fee to their customer’s invoices called a Compliance & Business Impact Charge. Advanced’s website justifies the new fee by stating that their ‘operating locations have and will continue to incur rising business impacts’.
On May 1, 2018, Penn Waste notified Edge that is was going to be contacting all of their customers in reference to adding a 10% sustainability fee to all of their accounts effective June 1, 2018. The collapse of the recycling markets was stated as one of the reasons for the fee.
On May 8, 2018, Edge received notice that WM is going to be charging contamination charges based on the size of the container for excess contamination.
Edge has also seen other haulers arbitrarily increasing their rates and/or fees.
As always, Edge is working with the haulers to reverse these new fees and increases in order to minimize the impact of these changes on Edge customers.
As a result of these changes in the recycling marketplace, Edge anticipates even lower rebates on recyclable materials, higher costs for general recycling for businesses and homeowners, and possible changes to single stream recycling.
As stated in last quarter’s issue, the bottom line is to ‘Recycle Often, Recycle Right’ with ‘Quality over Quantity’.
At Edge, we constantly monitor the market for ways to help our customers improve their sustainability efforts and reduce costs.
Please feel free to reach out to our experts should you have any questions related to the above articles or the environmental services industry.